News Column

Air France-KLM Blames High Oil Prices for Losses

March 8, 2012

Clare Byrne

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Air France-KLM on Thursday blamed global economic uncertainty and spiralling gasoline prices for net losses of 809 million euros ($1 billion) in 2011.

The group's fuel bill rose 16.3 percent over the year to 6.4 billion euros, contributing to operating losses of 353 million euros, its 2011 annual report showed.

The losses contrasted with net profits of 289 million euros in 2010.

"2011 was a tough year for the group, due to the uncertain operating environment and the high fuel price," Jean-Cyril Spinetta, the company's chairman said in a statement.

Total revenue rose 4.5 per cent to 24.36 billion euros as passenger traffic grew slightly.

With the fuel bill expected to rise by a further 1.1 billion euros in 2012, and cargo traffic in decline, the success of a savings plan announced in January was "crucial," Spinetta said.

The group has launched a three-year programme aimed at reducing non-fuel costs by around 10 per cent and reducing its debts by two billion euros.

The plan includes a two-year freeze on wage increases and the suspension of some planned investments in new aircraft.

Air France-KLM said it expected operating results in the first half of 2012 to be down on last year but that by the second half of the year the savings plan should be starting to bear fruit.

The board decided not to pay a dividend for 2011.

Source: (c) 2012 Deutsche Presse-Agentur GmbH (Hamburg, Germany)

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